Law Debenture describes 'resilient' first-half performance
By Josh White
Date: Friday 29 Jul 2022
(Sharecast News) - Law Debenture reported a net asset value total return, with debt and independent professional services at fair value, of -4% for the first half on Friday.
The FTSE 250 company reported "another period of strong performance" from independent professional services, with profit before tax up 5.9% and valuation up 4.9% to £178.4m.
It noted the issue of 3.81 million new shares at a premium to net asset value, to existing and new investors, with net proceeds of £30.4m to support ongoing investment.
The company's ongoing charges continued to be "low" at 0.482%, compared to the industry average of 1.093%.
Law Debenture also declared a first interim dividend of 7.25p per share, paid in July, representing an increase of 5.5% over the prior year's first interim dividend.
"Law Debenture aims to provide a steadily increasing income for our shareholders whilst achieving long-term capital growth in real terms," said chairman Robert Hingley.
"The group has an excellent long-term record for outperformance, and we are encouraged by the relative capital preservation and continued good performance from independent professional services in this turbulent and challenging period of political and economic uncertainty."
Hingley said the board was "confident" that, in the long term, the combination of a "robust and well-positioned" equity portfolio and continued growth in independent professional services would deliver "attractive returns" for shareholders.
"Independent professional services benefits from strong recurring revenues, and the team is investing to ensure the consistent growth delivered in the last four years can be sustained over the longer term."
Law Debenture said it intended for each of the first three interim dividends for 2022 to be equivalent to a quarter of its total 2021 dividend of 29p per share.
Performance and growth in independent professional services, meanwhile, was supporting its intention to "maintain or increase" the total dividend for the year.
It reported a dividend yield of 3.8% for the first interim dividend, and noted a combined annual growth rate of 13.8% in dividends over the last four years.
Looking at its investment portfolio, Law Debenture described a "material outperformance" of the benchmark over three, five and 10 years.
It also described a "strong" long-term record, with a share price total return over 10 years of 180.8% compared to the FTSE All-Share's 94.6%, and of 808.9% over 25 years compared to 312.5% on the FTSE All-Share.
The company said its first-half revenue return from the portfolio was £16.9m, up 65.6% from the £10.2m it reported at the interim in 2021.
Its wholly-owned independent professional services division, meanwhile, accounted for 19% of its first half net asset value, but had funded 36.4% of dividends in the last 10 years.
The board said the operation was entering its fifth consecutive year of growth, with net revenues rising 11.3% year-on-year to £21.7m for the first half.
"Against a very challenging and uncertain political and economic backdrop, with rising global inflation and interest rates, Law Debenture has delivered another resilient performance," said chief executive officer Denis Jackson.
"The group has maintained its consistent long-term benchmark outperformance.
"The strong, consistent income from the independent professional services business offers our portfolio managers greater flexibility in their investment selection, helping set Law Debenture apart from other UK equity income trusts and underpinning our confidence in our ability to continue to outperform in the long-term."
At 0931 BST, shares in the Law Debenture Corporation were down 0.04% at 774.7p.
Reporting by Josh White at Sharecast.com.
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